AI processes are much more efficient in identifying data patterns than humans which is beneficial for companies to understand their target audience and gain insight.5 WAYS HOW AI HAS TRANSFORMED THE FINANCE INDUSTRY ARE –
1. Risk Assessment:
Since the very basis of AI is learning from past data; it is natural that AI should succeed in the Financial Services domain, where bookkeeping and records are second nature to the business. Let’s take the example of credit cards. Today, we use credit score as a means of deciding who is eligible for a credit card and who isn’t. However, grouping people into ‘haves’ and ‘have-nots’ is not always efficient for business. Instead, data about each individual’s loan repayment habits, the number of loans currently active, the number of existing credit cards, etc. can be used to customize the interest rate on a card such that it makes more sense to the financial institution that is offering the card. Now, take a minute to think about which system has the capability to go through thousands of personal financial records to come up with a solution- a learned machine of course! This is where AI comes in. Since it is data driven and data dependent, scanning through these records also gives AI the ability to make a recommendation of loan and credit offerings which make historical sense..
AI and ML are taking the place of a human analyst very fast as inaccuracies which are involved in human selection may cost millions. AI is built upon machine learning which learns over time, less possibility of mistake and analyzing vast volumes of data; AI has established automation to the areas which require, intelligent analytical and clear-thinking. Financial Services Chatbots have indeed proven themselves as a powerful tool to customer satisfaction and an unmatched resource for the enterprises helping them save a lot of time and money. Now, getting back to Facebook’s endeavors in designing and developing Bots to make negotiations the way humans do, let us analyze the chances of the success of this research. This new technology will not only change the way we do business but also non-commercial activities. The example of non-commercial activities can include fixing meeting time. The Bots can fix up the meetings keeping in mind the availability of everyone involved in the meeting.
2. Fraud Detection And Management:
Every business aims to reduce the risk conditions that surround it. This is even true for a financial institution. The loan a bank gives you is basically someone else’s money, which is why you also get paid an interest on deposits and dividends on investments. This is also why banks and financial institutions take fraud very, very seriously. AI is on top when it comes to security and fraud identification. It can use past spending behaviors on different transaction instruments to point out odd behavior, such as using a card from another country just a few hours after it has been used elsewhere, or an attempt to withdraw a sum of money that is unusual for the account in question.Another excellent feature of fraud detection using AI is that the system has no qualms about learning. If it raises a red flag for a regular transaction and a human being corrects that, the system can learn from the experience and make even more sophisticated decisions about what can be considered fraud and what cannot.
3. Financial Advisory Services:
According to the Pwc Report, we can look forward to more robo-advisors. As the pressure increases on financial institutions to reduce their rates of commission on individual investments, machines may do what humans don’t- work for a single down payment. Another evolving field is bionic advisory, which combines machine calculations and human insight to provide options that are much more efficient than what their individual components provide.Collaboration is key. It is not enough to look at a machine as an accessory, or on the other end, as an insufferable know-it-all. An excellent balance and the ability to look at AI as a component in decision-making that is as important as the human viewpoint is the future of financial decision-making.
Investment companies have been relying on computers and data scientists to determine future patterns in the market. As a domain, trading and investments depend on the ability to predict the future accurately. Machines are great at this because they can crunch a huge amount of data in a short while. Machines can also be taught to observe patterns in past data and predict how these patterns might repeat in the future. While anomalies such as the 2008 financial crisis do exist in data, a machine can be taught to study the data to find ‘triggers’ for these anomalies, and plan for them in future forecasting as well.What’s more, depending on individual risk appetite, AI can suggest portfolio solutions to meet each person’s demand. So a person with a high-risk appetite can count on AI for decisions on when to buy, hold and sell stock. One with a lower risk appetite can receive alerts for when the market is expected to fall, and can thus make a decision about whether to stay invested in the market or to move out.
5. Managing Finance:
Managing finances in this well-connected and the materialistic world can be a challenging task for so many of us, as we look further into the future we can see AI helping us to manage our finances. PFM (personal financial management) is one of the recent developments on the AI-based wallet. Walletstarted by a San Francisco based startup, uses AI to builds algorithms to help the consumers make smart decisions about their money when they are spending it. The idea behind the wallet is very simple it just accumulates all the data from your web footprint and creates your spending graph. Advocates of privacy breaching on the internet may find it offensive but, maybe be this is what lies in future. Thus it has to be the preferred personal financial management in order to save time from making lengthy spreadsheets or writing on a piece of paper. From a small-scale investment to a large scale investment AI commits to be a watchdog of future for managing finances.
Without a speck of doubt, AI is the future for the finance industry. Since the speed at which it is making progressive steps towards making the financial processes easier for the customers, it is very soon going to replace humans and provide faster and much more efficient solutions. Bots are gradually evolving as innovations are being in the AI sector. Massive investments are being made by the firms who are seeing this as a long-term cost-cutting investment. It helps the companies in saving money of hiring humans and also avoiding human errors in this process.
Though it is still in its nascent stage the speed at which it is progressing to evolve the finance sector, it can be well expected that the prospects are going to lead to minor losses, smarter trading and of course top-notch customer experience.